United States v. California, 2:19-cv-02142 WBS EFB

• Decision Date: 16 July 2020
• Docket Number: No. 2:19-cv-02142 WBS EFB,2:19-cv-02142 WBS EFB
• Parties: UNITED STATES OF AMERICA, Plaintiff, v. STATE OF CALIFORNIA; GAVIN C. NEWSOM, in his official capacity as Governor of the State of California; CALIFORNIA AIR RESOURCES BOARD; MARY D. NICHOLS, in her official capacity as Chair of the California Air Resources Board and as Vice Chair and a board member of the Western Climate Initiative, Inc.; WESTERN CLIMATE INITIATIVE, INC.; JARED BLUMENFELD, in his official capacity as Secretary for Environmental Protection and as a board member of the Western Climate Initiative, Inc.; KIP LIPPER, in his official capacity as a board member of the Western Climate Initiative, Inc., and RICHARD BLOOM, in his official capacity as a board member of the Western Climate Initiative, Inc., Defendants.
• Court: U.S. District Court — Eastern District of California

UNITED STATES OF AMERICA, Plaintiff, v. STATE OF CALIFORNIA; GAVIN C. NEWSOM,

in his official capacity as Governor of the State of California;

CALIFORNIA AIR RESOURCES BOARD; MARY D. NICHOLS,

in her official capacity as Chair of the California Air Resources Board

and as Vice Chair and a board member of the Western Climate Initiative, Inc.;

WESTERN CLIMATE INITIATIVE, INC.; JARED BLUMENFELD,

in his official capacity as Secretary for Environmental Protection

and as a board member of the Western Climate Initiative, Inc.;

KIP LIPPER, in his official capacity as a board member of the Western Climate Initiative, Inc.,

and RICHARD BLOOM, in his official capacity

as a board member of the Western Climate Initiative, Inc., Defendants.

No. 2:19-cv-02142 WBS EFB

UNITED STATES DISTRICT COURT EASTERN DISTRICT OF CALIFORNIA

July 16, 2020

MEMORANDUM AND ORDER RE: SECOND CROSS-MOTIONS FOR SUMMARY JUDGMENT

Plaintiff United States of America ("United States") brought this action against the State of California¹ and other related individuals and entities² alleging, inter alia, California's cap-and-trade program is preempted under the Foreign Affairs Doctrine. (First Am. Compl. ("FAC") (Docket No. 7).) Presently before the court are the parties' cross-motions for summary judgment on that claim alone. (Docket Nos. 102, 108, 110.)

I. Summary of Facts and Procedural History

The court exhaustively set forth relevant facts in its previous Order granting defendants' summary judgment on the Treaty Clause and Compact Clause. (See MSJ Order at 2-16 (Docket No. 91).) For purposes of this Order, the court will offer brief summaries of the relevant treaties, statutes, agreements, and actions directly bearing on the Foreign Affairs Doctrine claim.

A. Relevant Policies

Beginning in the 1950s, "Congress enacted a series ofstatutes designed to encourage and to assist the States in curtailing air pollution." Chevron, U.S.A., Inc. v. Nat. Res. Def. Council, Inc., 467 U.S. 837, 845 (1984). Among these was the Clean Air Act, 42 U.S.C. § 7401 et seq., which provided that "pollution control at its source is the primary responsibility of States and local governments." 42 U.S.C. § 7401(a)(3). Since then, regulation of air pollution -- including greenhouse gases, see Massachusetts v. EPA, 549 U.S. 497, 532 (2007) -- has been viewed as a "joint venture" between "the States and the Federal Government" as "partners in the struggle against air pollution." In re Volkswagen "Clean Diesel" Mktg., Sales Pracs., & Prods. Liab. Litig., 959 F.3d 1201, 1214 (9th Cir. 2020) (quoting Gen. Motors Corp. v. United States, 496 U.S. 530, 532 (1990)).

In 1987, Congress passed the Global Climate Protection Act of 1987 ("GCPA"), Title XI of Pub. L. 100-204, 101 Stat. 1407, note following 15 U.S.C. § 2901. Its ultimate aims were to "increase worldwide understanding of the greenhouse gas effect" and "foster cooperation among nations to develop more extensive and coordinated scientific research efforts with respect to the greenhouse effect." Id. §§ 1103(a)(1)-(2). The GCPA directed the Environmental Protection Agency ("EPA") to author a report to Congress detailing a "coordinated national policy on global climate change" and ordered the Secretary of State to work "through the channels of multilateral diplomacy" to combat global warming. Id. §§ 1103(b)-(c); see also Massachusetts, 549 U.S. at 508.

In conformity with the GCPA, President George H.W. Bush signed, and the Senate ratified, the United Nations FrameworkConvention on Climate Change of 1992 ("1992 Convention"). (First Decl. of Rachel E. Iacangelo ("First Iacangelo Decl.") ¶ 4, Ex. 2 at D1316 (Docket No. 12-2).) The 1992 Convention sought to "stabiliz[e] [] greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system" by adopting "regional programmes containing measures to mitigate climate change." (Id. at ¶ 3, Ex. 1 at 4, Arts. 2, 4.) Following these national and international directives, the federal and state governments have sought to combat greenhouse gas emissions in a variety of ways, including through cap-and-trade programs.

In 2006, the California legislature enacted the California Global Warming Solutions Act of 2006, Cal. Health & Safety Code § 38500 et seq. ("the Global Warming Act"). The Global Warming Act aimed to assuage "serious threat[s] to the economic well-being, public health, natural resources, and the environment of California" by adopting a series of programs to limit the emissions of greenhouse gases. See Cal. Health & Safety Code § 38501(a). The legislature charged the California Air Resources Board ("CARB") with the task of designing an "integrated and cost-effective regional, national, and international . . . program[]" to "achieve the maximum . . . reductions in greenhouse gas emissions." Cal. Health & Safety Code §§ 38560, 38561(a), 38562(c)(2), 38564.

CARB promulgated regulations to implement a cap-and-trade program in October 2011. (Decl. of Rajinder Sahota ("Sahota Decl."), ¶ 20 (Docket No. 50-2); First Decl. of Michael S. Dorsi ("First Dorsi Decl."), Ex. 4 (Docket No. 50-3).)California's cap-and-trade program was intended to provide a market-based approach to reducing greenhouse gas emissions. CARB establishes yearly caps, called "budgets," to limit the amount of emissions a group of particular sources, called "covered entities," may emit for a set period. (Sahota Decl. ¶ 21); Cal. Code Regs. tit. 17, § 95802(a). At year's end, covered entities are required to acquire and surrender "compliance instruments" equivalent to the metric tons of greenhouse gas they emit. (Sahota Decl. ¶ 22.) Budgets then decrease each year to encourage covered entities to reduce their emissions. (Id. ¶ 21.)

California's cap-and-trade program includes a "framework for linkage" to accept the compliance instruments of other "states and [Canadian] provinces" to "provide an additional cost containment mechanism . . . and secure additional [greenhouse gas emission] reductions." (First Dorsi Decl. ¶ 7, Ex. 5 at 193); see also Cal. Code Regs. tit. 17, §§ 95940-43. After an external trading system is approved by the legislature and California's Governor, see Cal. Gov. Code § 12894(f), covered entities can use compliance instruments acquired through linked jurisdictions to satisfy their compliance obligations in California, and vice versa. Cal. Code Regs. tit. 17, §§ 95942(d)-(e). California contracted with Western Climate Initiate, Inc. ("WCI, Inc."), a non-profit corporation, to facilitate linkages by tracking ownership of the compliance instruments.³ (First Decl. of Greg Tamblyn ("First TamblynDecl.") ¶ 5 (Docket No. 46-2); see also Agreement 11-415 Between Air Resources Board and WCI, Inc. ("Agreement 11-415") (Docket No. 7-3).)

On February 22, 2013, CARB requested that California's Governor, Edmond G. Brown, Jr., make the findings required by law to link California's cap-and-trade program with Quebec's. (Sahota Decl. ¶ 32.) Governor Brown made the four linkage findings in April 2013. (Id. ¶ 33.) After the programs were linked in September 2013, the parties signed an agreement memorializing their commitment "to work jointly and collaboratively toward the harmonization and integration of [their] cap-and-trade programs for reducing greenhouse gas emissions" ("2013 Agreement"). (Id. ¶¶ 44-49; First Dorsi Decl., ¶ 10, Ex. 8.) The linkage between California and Quebec became operational by regulation on January 1, 2014. Cal. Code Regs. tit. 17, § 95943(a)(1).

In 2016, various parties to the 1992 Convention -- including the United States -- entered into the Paris Agreement of 2015 by executive order ("Paris Accord"). (First Iacangelo Decl. ¶ 5, Ex. 3 at 3.) In furtherance of the 1992 Convention, the Paris Accord aims to "hold[] the increase in the global average temperature to well below 2 degrees Celsius" and "pursu[e] efforts to limit the temperature increase to 1.5 degrees Celsius above pre-industrial levels." (Id.) In June2017, President Trump announced the United States would withdraw from the Paris Accord and instead "negotiate a new deal that protects our country and its taxpayers."⁴ (Id. ¶ 7, Ex. 5 at 5.)

President Trump's announcement did not deter California from expanding its cap-and-trade program. A linkage between California, Quebec, and Ontario became operational by regulation on January 1, 2018, although the relationship with Ontario ended shortly thereafter. See Cal. Code Regs. tit. 17, § 95943(a)(2). Despite Ontario's withdrawal, California and Quebec remain parties to the Agreement on the Harmonization and Integration of Cap-and-Trade Programs for Reducing Greenhouse Gas Emissions ("the Agreement"), signed by each jurisdiction following the linkage in 2017.⁵ (First Iacangelo Decl. ¶ 28, Ex. 26.)

The Agreement memorializes each jurisdiction's commitment to harmonizing their cap-and-trade programs to ensure compatibility while respecting each jurisdiction's individual sovereignty. (See generally Agreement.) It "does not modify any existing statutes and regulations nor does it require or commit the Parties or their respective regulatory or statutory bodies to create new statutes or regulations." (Id. at 9.) While Article 17 provides that parties "shall endeavor to provide" other signatories with 12 months' notice before withdrawing, (id. at10), the jurisdictions are effectively "free to withdraw at any time." (See MSJ Order at 28.)

B. Procedural History

The United States initially filed this action in October 2019, asserting that the Agreement, Agreement 11-415, and "supporting California law"⁶ operationalizing California's cap-and-trade agreement are unconstitutional under Article I's Treaty and Compact Clauses⁷ and the Foreign Affairs Doctrine.⁸ (SeeCompl. (Docket No. 1).) After filing an amended complaint, the United States moved for summary judgment on its Treaty and Compact Clause claims on December 11, 2019. (USA First Mot. for Summ. J....